John F. Kennedy on Free Trade

Sell surplus wheat to Russia to alleviate food shortages

As part of his attempts to ease tensions with the Soviet Union, President Kennedy had, in October, offered to help alleviate its serious food shortage by selling it wheat from America's surplus, and by allowing Russia, short of foreign exchange reserves,
to finance the purchase on credit from the US Export-Import Bank.

Helping Russia out of a jam was anathema to Capitol Hill hard-liners. Calling Kennedy's plan "indefensible," one of the hardest,
Republican Senator Karl E. Mundt of South Dakota, had attached an amendment to the foreign aid bill prohibiting the Export-Import Bank from extending the credit.

The amendment would probably kill the wheat deal.

At the legislative leaders' breakfast on November 21, the day Kennedy left for Texas, Kennedy had insisted that the Mundt bill must be defeated.

Every industry wants higher tariffs on competitors

In my office today, for example, was a delegation representing New England textile mills, an industry essential to our prosperity. They want the tariff lowered on the imported wool they buy from Australia and they want the tariff raised on the finished
woolen goods imported from England with which they must compete.

All of us in the Senate meet endless examples of such conflicting pressures, which only reflects the inconsistencies inevitable in our complex economy.
If we tell our constituents frankly that we can do nothing, they feel we are unsympathetic or inadequate. If we try and fail--usually meeting a counteraction from other Senators representing
other interests--they say we are like all the rest of the politicians. All we can do is retreat into the Cloakroom and weep on the shoulder of a sympathetic colleague--or go home and snarl at our wives.

Economic isolation incompatible with political leadership

The [Roosevelt era's] Reciprocal Trade Act had become inadequate as successive renewals narrowed the President's negotiating authority. The President felt the fierce fight might be fought only once for a wholly new trade instrument. "The US did not rise
to greatness by waiting for others to lead. Economic isolation and political leadership are wholly incompatible."

The 1962 bill gave the President a 5-year authority to cut all tariffs by as much as 50% and to cut tariffs down to zero on those
commodities traded predominantly by the US. He never avoided the fact that, in order to sell more, we would have to buy more; and he proposed a measure to provide Federal "adjustment assistance" to firms and workers injured by any increase in imports
deemed desirable. "It is time we recognized," he said, that trade is "no longer a matter of local economic interest but of high national policy. This bill by enabling us to strike a bargain with the common Market, will 'strike a blow' for freedom."

Send surplus wheat to Russians, while subsidizing US farmers

While the sale of 65 million bushels of surplus wheat would hardly make a dent in our storage, it would bring added income and employment to American agriculture and business, benefit our balance of payments, and reduce
Federal storage costs.

The granting of export licenses to sell wheat to the Russians was not prohibited under any of the statutes limiting commercial transactions with the Communists. But Congress had added to the Agricultural Act of 1961 an amendment
opposing the sale of subsidized agricultural commodities to unfriendly nations. Republican legislators were already invoking this provision as an obstacle to any sale.

Kennedy decided to ignore it, and offered ample reason. It was only a non-binding
declaration of intent. It had been adopted at the height of the Berlin crisis in a wholly different climate. And the subsidy went not to the foreign buyer but to the American heat farmer, regardless of where and whether the wheat was sold.

New instrument of trade policy with European Common Market

If we are to pay for our commitments abroad, we must expand our exports. Our businessmen must be export conscious and export competitive. Our tax policies must spur modernization of our plants--our export credit and promotion campaigns for
American industries must continue to expand.

But the greatest challenge of all is posed by the growth of the European Common Market. Assuming the accession of the United Kingdom, there will arise across the Atlantic a trading partner behind a single
external tariff similar to ours with an economy which nearly equals our own. Will we in this country adapt our thinking to these new prospects and patterns--or will we wait until events have passed us by?

This is the year to decide.
The Reciprocal Trade Act is expiring. We need a new law--a wholly new approach--a bold new instrument of American trade policy. Our decision could well affect the economic growth of our Nation for a generation to come.

No need for restrictive trade policies

We hold large assets abroad--the total owed this nation far exceeds the claims upon our reserves--and our exports once again substantially exceed our imports.

In short, we need not--and we shall not--take any action to increase the dollar price of
gold from $35 an ounce--to impose exchange controls--to reduce our anti-recession efforts--to fall back on restrictive trade policies--or to weaken our commitments around the world.

Persuade other countries not to restrict our goods coming in

NIXON: We have to increase our exports, as compared with our imports. And here we have a very strong program going forward in the Department of Commerce. This one must be stepped up.

KENNEDY: Many countries still keep restrictions against our goods,
going all the way back to the days when there was a dollar shortage. Now there isn't a dollar shortage, and yet many of these countries continue to move against our goods. I believe that we must be able to compete in the market--steel and in all the
basic commodities abroad--we must be able to compete against them because we always did because of our technological lead. We have to persuade these other countries not to restrict our goods coming in, not to act as if there was a dollar gap; and third,
we have to persuade them to assume some of the responsibilities that up till now we've maintained, to assist underdeveloped countries make an economic breakthrough on their own. [But] we have to be able to compete in the world market.